Analysis of the Impact of the Large-Scale Power Outage in San Francisco on PG&E's Operational Costs and Regulatory Risks

On December 20, 2025, a large-scale power outage occurred in San Francisco, affecting approximately 130,000 PG&E customers [2][3][5]. The outage was caused by a fire at PG&E’s substation located at Eighth Street and Mission Street [2][3][5]. As the local power supplier, PG&E needs to bear various operational costs: including automatic bill credits of $200 for residents and $2500 for businesses. Based on an estimate of 100,000 residents and 30,000 businesses, the total is approximately $95 million [5]; the cost of using diesel generators is about $1.2 million to $1.8 million [3]; the costs for substation repair and independent investigation have not been announced yet, but significant expenditures are expected [3]. At the same time, the California Public Utilities Commission (CPUC) has launched an investigation into the incident [1]. Combined with PG&E’s history of completing bankruptcy reorganization due to wildfire liability in 2020 [1][4], this incident may trigger stricter regulatory scrutiny.

Although PG&E’s stock (PCG) fluctuated slightly before and after the incident [0], the increase in operational costs will directly affect the company’s short-term financial performance. In addition, if the CPUC’s investigation finds issues such as insufficient infrastructure maintenance by PG&E, it may face regulatory penalties, further increasing costs and affecting the company’s reputation. The negative sentiment of the community towards PG&E [3][5] may also push regulators to introduce stricter safety requirements, increasing the company’s long-term operational pressure.

: 1. Increased direct operational costs, including customer compensation and equipment repair; 2. Elevated regulatory risks, as the CPUC investigation may lead to fines or stricter operational requirements; 3. Reputational damage, exacerbating public distrust in the company. : If PG&E can take this opportunity to strengthen infrastructure upgrades and emergency response capabilities, it may improve long-term operational stability and restore public confidence.

The large-scale power outage in San Francisco has brought short-term operational cost pressure to PG&E, while it also faces an investigation by regulatory authorities. Although the market’s short-term reaction to the incident was mild [0], considering PG&E’s historical regulatory record, the company needs to closely monitor the investigation progress and actively take measures to reduce potential risks.